On September 29, the Times of San Diego reminded us that Diane Harkey "directly received money for her political campaigns from the funds taken out of [her husband's ponzi scheme] business."
Yes, she has been funding her political career with money from a ponzi scheme that wiped out the savings of elderly investors. The sheer audacity of this is astounding.
More from the Times:
[The] record shows that an Orange County jury, trial court, and appellate court all concluded that Mr. Harkey ran a Ponzi scheme that defrauded elderly and other investors from 2000 to 2008, holding him personally liable for repaying more than $10 million in damages — plus another $1 million in punitive damages for willfully and intentionally causing great harm. In 2013, an Orange County jury found that he breached his fiduciary duties to his investors and committed financial elder abuse. Three months ago, this judgment was affirmed by the California Court of Appeal.
The appellate court specifically held that Mr. Harkey had operated “a Ponzi scheme bilking his investors.” A Ponzi scheme is an investment fraud that involves paying purported (but actually fake) profits to existing investors from fresh funds contributed by new investors who are enticed by the prospect of the high returns being received by the early investors. When the spigot of new money dries up, later investors are left holding the bag and usually recover only pennies on their dollars.
As the court explained, “The mere existence of a Ponzi scheme is sufficient to establish actual intent to defraud.” So, yes, “Ponzi scheme” and “fraud” are exactly the right words to describe Mr. Harkey’s conduct.
The jury also found that Mr. Harkey improperly took money out of the business in the form of high fees, even though he had promised investors that he would not do so. And Mr. Harkey used company assets to pay many personal expenses. Ms. Harkey herself directly received money for her political campaigns from the funds taken out of the business. In short, even though she was not held liable for the fraud (about that, she is telling the truth), she benefited from it.
As her publicly filed campaign finance reports show, in 2006 she contributed about $900,000 to her failed bid for the state Senate. She contributed about $200,000 to her successful state Assembly race in 2008. Although she claims those funds came from her own income, she testified in the lawsuit that, when she needed to pay campaign bills in 2006, she simply asked the chief financial officer of her former husband’s business for money — and got it.
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